Amsterdam, The Netherlands — LG.Philips Displays, the joint venture between Korea’s LG Electronics and Royal Philips Electronics, based here, will take an impairment charge of about $725 million in the fourth quarter, doing this as a non-cash write-off of assets.
LG.Philips, which provides cathode ray tubes (CRTs) for television and computer monitors, has seen a reduction in demand for CRTs in recent months, due to competition from flat-panel televisions. Flat panels have posted capacity increases and suffered very strong price erosion to become more competitive.
At the same time, Philips said it would take a $499.7 million charge in the fourth quarter on its LG.Philips Displays unit. The company said it would write-off the entire $152.8 million book value of the joint-venture unit, but that this would not have an impact on earnings again after this quarter. The impairment charge is non-cash, but Philips said it also would take a cash charge of $50.1 million.
In light of a shifting global demand for CRTs, Jeong II Son, president/CEO of LG.Philips, said, "The market for CRTs is still large, but it is becoming more concentrated in emerging economies. LG.Philips Displays is committed to maintain its technological and commercial leadership in those markets, where CRTs will dominate in the year’s ahead."